TR072610-12/14

RETIREMENTThe ROAD to

RETIREMENT PLANNING AND THE ROLE OF LIFE INSURANCE

LIFE’S A JOURNEY,NOT A DESTINATION.RETIREMENT IS BOTH.

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THE ROAD TO RETIREMENTYOUR SUCCESS ON THE ROAD CAN BE MADE SMOOTHER

BY PREPARING AND KNOWING YOUR OPTIONS.

No matter the course taken, the truth is that most retirees will need more funds in retirement than they think. And counting on the government or corporate

sponsored plans can lead to disappointment.

Defined contribution: a retirement plan where a certain amount or percentage of money is set aside by a company for the benefit of the employee. There are restrictions on how and when funds can be withdrawn. A common example of this type of plan is a 401(k) plan.

Defined benefit: a retirement plan where a company pays a retiring employee a fixed amount of money each year, normally based on a percentage of salary and years of employment.

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In 1945, the ratio of workers paying taxes to the people receiving benefits was 41.9:1. In 2012, the ratio fell to 2.9:1. It is expected that this ratio will drop even further in the future.2

FINANCIAL ROADBLOCKS: PROCEED WITH CAUTION

WILL SOCIAL SECURITY BE ENOUGH?

1991

50%

The 2014 Retirement Confidence Survey reported that the percentage of workers expecting to retire before age 65 has decreased, from 50% in 1991 to 27% in 2014. These workers reported that one of the top reasons for this change was a lack of faith in Social Security.3

2014

27%

The number of workers participating in defined benefit pension plans in the private industry dropped.4

1991

2011 18%35%

In the 2013 Bureau of Labor Statistics report, only 10% of private industry establishments offer defined benefit pension plans.5

10%

ARE PENSIONS DISAPPEARING?

The 2013 401(k) Performance Study by American Investment Planners, LLC, reported that in 2011, 42% of businesses did not match employees 401(k) contributions.6

42%PERCENTAGE OF BUSINESSES THAT DIDN’T MATCH 401(K) CONTRIBUTIONS

According to the Social Security Administration, Social Security is the

largest source of income for most elderly Americans today, but it was

never intended to be your only source of income when you retire.1

:

:

1945

2012

41.9:1

2.9:1

A 2012 survey of baby boomers indicated that one-third may not receive any inheritance.7

INHERITANCE

NONE

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FINANCIAL ROADBLOCKS: PROCEED WITH CAUTION

WINDFALL: WHAT ARE YOUR CHANCES?

47%Without adequate savings, an unexpected death can have a

negative financial impact. In fact, in a recent survey, 47% of

respondents reported they would feel the financial impact of a

primary wage earners death in as little as 6 months.10

Less than half (44%) of respondents in the 2014 Retirement Confidence Survey reported they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire.9

44%

36% of respondents in the 2014 Retirement Confidence Survey stated they have less than $1,000 in savings.9

36%

According to the Center for Retirement Research at Boston College, the median inheritance was only $64,000.7

ARE YOU SAVING ENOUGH?

The odds of winning the Powerball®:

1 in 175,223,5108

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ENSURING YOUR RETIREMENT

2014 PRICE $0.49 $40,917 $311,400

1985 PRICE $0.22 $15,137 $100,800

STAMP COLLEGE HOME

COSTS CONTINUE TO RISE*

KEY TO LIVING THE RETIREMENT OF YOUR DREAMS

OUTPACES INFLATION MAY BE

INFLATIONIT’S NOT HOW MUCH YOU EARN, BUT WHAT IT BUYS.

From postage stamps to the cost of buying a home, prices generally rise over the long term and the value of money decreases. This is the effect of inflation. The longer it takes to reach retirement, the greater impact inflation can have on your buying power. Because of this, you may need to consider the effects of inflation and how to outpace it.

* Source: Stamp: U.S. Postal Service. College: The College Board Trends in College Pricing 2013 Average Fixed Changes (tuition fees, room and board for one year) for undergraduates, 2013-2014 (weighted) at a four-year private university. Home: U.S. Census Bureau. New One-Family Houses Average Selling Price.

MONTHLY INVESTMENT

RATE OF RETURN

YEARS TO REACH

$1,000,000

BEFORE INFLATION

VALUE OF $1,000,000

AFTER INFLATION

$100 1.25% 196 years $1,000,000 $2,309

$100 7.50% 57 years $1,000,000 $171,090

$100 12.0% 41 years $1,000,000 $289,676

$500 1.25% 91 years $1,000,000 $61,561

$500 7.50% 36 years $1,000,000 $338,200

$500 12.0% 27 years $1,000,000 $446,934

A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2013, as reported by the Federal Reserve Bank of Minneapolis. These hypothetical scenarios are based on an assumed rate of return compounded annually. These examples are for illustrative purposes only and are not meant to represent a real investment. The results do not take into account any taxes, fees and charges associated with investments. If they did, the number of years to reach $1,000,000 would be higher. It is unlikely that any one rate of return will be sustainable over a long period of time.

This chart shows how long it takes to accumulate $1,000,000 and how an average inflation rate of 3.05% compounded annually would impact the value of $1,000,000 over the period it takes to save it.

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IF TAXABLE INCOME IS:

CURRENT RATES RATES REQUIRED

$0 - $16,750 10.0 15.4

$16,750 - $68,000 15.0 23.1

$68,000 - $137,300 25.0 38.5

$137,300 - $209,250 28.0 43.2

$209,250 - $373,650 33.0 50.9

$373,650 - and over 35.0 53.9

SUGGESTED INCOME TAX RATE CHANGES15

(MARRIED FILING JOINTLY)

DEFINITION: The debt-to-GDP ratio is one of the indicators of the health of an economy. It is the amount of national debt of a country as a percentage of its Gross Domestic Product (GDP).

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INCOME TAXESIT’S NOT HOW MUCH YOU EARN, BUT HOW MUCH YOU KEEP.

High National Deficits » For all but four of the last 40 years the Federal Government has run a deficit.11

» The Federal Budget Deficit in 2013 was more than twice the previous post-World War II record.11

» It’s projected that the federal budget deficit would total $7.6 trillion over the 2014 - 2024 decade.12

The Congressional Budget Office estimated that the ratio of publicly held debt to GDP in 2013 was 73%, twice the percentage it was in 2007.13 The Urban-Brookings Tax Policy Center estimates that under current policy, the debt/GDP ratio will rise to 100% in 2038 and then continue to rise. All told, to keep the debt/GDP ratio at just over 70% through 2040 would require immediate and permanent policy adjustments such as reductions in spending or increases in taxes.14

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How would you like a vehicle that can help:

» Protect your family against the financial loss resulting from the death of the breadwinner?

» Protect your future by accumulating cash value that can supplement your income in retirement?

A permanent cash value life insurance policy provides:

» A federal income tax-free death benefit.

» Tax-advantaged loans and cash withdrawals.*

» Tax deferral on any policy value growth.

PROTECTIONAN UNEXPECTED LOSS DOES NOT HAVE TO CREATE A FINANCIAL BURDEN.

* Loans and withdrawals can only be made if the policy has been in force long enough and has accumulated sufficient value. Loans and withdrawals will reduce the cash value and death benefit and loans are subject to interest charges. Policy loans are generally not taxable when taken. If a policy is surrendered or lapses while a loan is outstanding, adverse tax consequences may result. Cash withdrawals are also not generally taxable until they exceed basis in the policy. However, if the policy is treated as a Modified Endowment Contract (MEC) by IRC Sec. 7702A, withdrawals and loans are taxable at an ordinary income tax rate when taken to the extent of gain then in the contract and may also be subject to a 10% federal income tax penalty if taken prior to age 59½. Cash distributions associated with benefit reductions, including reductions caused by withdrawals during the first 15 years, may be taxable. Consult with your tax advisor regarding your particular situation.

PROTECT YOUR FUTUREPROTECT YOUR FAMILY,

Help keep more of your retirement income » Access your accumulated cash value

through tax-advantaged policy loans and cash withdrawals. As long as there is sufficient cash value and you stay within the IRS guidelines, withdrawals and loans may be taken without federal income tax liability. See page 9 (*) for important information.

» Some policies allow transfer between cash value accounts, as your objectives change, tax free.

Help preserve your retirement income’s buying power

» Certain types of permanent life insurance allow you to allocate net premium to accounts that can help you fight inflation.

» Enhance cash value accumulation potential with tax-deferred earnings.

Help ensure your family can make ends meet if you were to pass away unexpectedly

» Protect your loved ones with a federal income tax-free death benefit.

» Protection that is there when you need it. Certain life insurance policies include an inherent no-lapse guarantee feature.

No-lapse guarantee feature assures the policy will remain in force during the no-lapse guarantee period as long as the minimum required premiums are paid.

LIFE INSURANCE CAN HELPSTEER YOU AROUND ROADBLOCKS.

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TODAY!YOUR ROAD TO RETIREMENT

START PLANNING

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IMPORTANT INFORMATION

TR072610-12/14

The issuing Company and its representatives do not give tax or legal advice. This material and the concepts presented here are for informational purposes only and should not be construed as tax or legal advice.

To comply with IRS Regulations, we are informing you of the following: Any discussion or advice regarding tax issues contained in this document was not intended or written to be used, and cannot be used, to avoid taxpayer penalties. Such discussion or advice was written to support the promotion or marketing of the transaction(s) or matter(s) contained in this document. Anyone reading this document or contemplating a transaction discussed in this material should seek advice based on the client’s particular circumstances from an independent tax advisor.

Life insurance products are issued by Transamerica Premier Life Insurance Company, Cedar Rapids, IA, Transamerica Life Insurance Company, Cedar Rapids, IA, or Transamerica Financial Life Insurance Company, Harrison, NY. All products may not be available in all jurisdictions. Transamerica Financial Life Insurance Company is authorized to conduct business in New York. Transamerica Premier Life and Transamerica Life Insurance Company are authorized to conduct business in all other states.

1 Sample Social Security Statement. March 7 2012. http://www.ssa.gov/myaccount/SSA-7005-OL.pdf

2 Social Security Administration, Office of Retirement and Disability Policy, Office of Research, Evaluation, and Statistics, Released August 2013, http://www.ssa.gov/policy/docs/chartbooks/fast_facts/2013/fast_facts13.pdf

3 Employee Benefit Research Institute and Greenwald & Associates, 2014 Retirement Confidence Survey, http://www.ebri.org/pdf/surveys/rcs/2014/RCS14.FS-2.Expects.Final.pdf.

4 Bureau of Labor Statistics, December 2012, Visual Essay: Private Industry Pension Plans, http://www.bls.gov/opub/mlr/2012/12/art1full.pdf

5 Bureau of Labor Statistics, The last private industry pension plans, January 2013, http://www.bls.gov/opub/ted/2013/ted_20130103.htm

6 2013 401k Performance Survey, American Investment Planners, LLC, Brett Goldstein, 2013.

7 Alicia Munnell, Andrew D. Eschtruth, Anthony Webb, and Zhenya Karamcheva. Center for Retirement Research at Boston College, January 2011, How Important Are Inheritances for Baby Boomers?

8 Multi-State Lottery Association. August 13, 2014. Powerball – Prizes and Odds. http://powerball.com/powerball/pb_prizes.asp

9 Employee Benefit Research Institute and Greenwald & Associates, 2014 Retirement Confidence Survey, http://www.ebri.org/pdf/surveys/rcs/2014/RCS14.FS-6.Expects.Final.pdf & http://www.ebri.org/pdf/surveys/rcs/2014/EBRI_IB_397_Mar14.RCS.pdf.

10 Ashley Durham, LIMRA, 2014 Insurance Barometer Study. April 2014. http://www.limra.com/Research/Abstracts/2014/140409-01.aspx.

11 Office of Management and Budget. www.whitehouse.gov/omb/budget/Historicals Table 1.1 - Summary of Receipts, Outlays, and Surpluses or Deficits 1789 - 2019

12 Congressional Budget Office. Updated Budget Projections: Fiscal Years 2014 to 2024. http://www.cbo.gov/sites/default/files/cbofiles/attachments/45229-UpdatedBudgetProjections_2.pdf

13 Congressional Budget Office. The 2013 Long-Term Budget Outlook. http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013_0.pdf

14 Alan J. Auerbach and William G. Gale, Fiscal Myopia, September 30, 2013, http://www.brookings.edu/~/media/research/files/papers/2013/09/30 fiscal myopia auerbach gale/30 fiscal myopia auerbach gale.pdf

15 Eric Toder, Jim Nunns and Joseph Rosenberg. March 2012. Reducing the Deficit by Increasing Individual Income Tax Rates.

Tax Policy Center, Urban Institute and Brookings Institution.